Global Economic Recession: Lessons and Impacts

The last decade of the previous century saw the whole world enmeshed in the web of globalization. Unemployment nosedived, even if it meant coffee-fuelled nights working as a night salesman with ears plastered with headphones. Engineers fresh out of school got the choicest of pay packets abroad. The whole world rejoiced in passion. Finally, at the threshold of the current century the global canvas was ready to be painted by millions of people world over to create the universal economic landscape of the new millennium. With a million hands stroking lively paint on it, a composite painting was in the making! The strokes got richer with colour with every stroke, each artist striving to leave the best imprint on the corporate canvas. Hardly seven-eight years passed. It was amazing. People around the world watched impatiently to have a glimpse of the finishing touches.

And without warning, one unanticipated slipshod stroke…and the splashes turned splotches! The blobs spread fast, soaking into the warp and woof of the fabric indelibly. Corporate houses, which were just a wink ago, bustling, went bust with corpulent losses. The unemployment and misery generated were to stay and for the whole world to share. The mesh had turned noose. Our best brains drained into a global gutter as pink slips brought black clouds. The same hands that had made perfect academic scores now scribbled suicide notes. It was more than a vicious cycle; it was a typhoon mixing a sinister grey onto the canvas in a circular flurry. Entire companies needed government bailouts. The stimulus package was really a survival package. More than one year on, ‘capitalism’ has lost the magic sheen it had assumed over the booming ‘glorious’ decades. The good old government job looks attractive now, even though it promises no quick buck packages. People prefer stability over flashy transience. Fingers pointed at investment banks whose greed led them to engage in sub-prime lending and ultimately the collapse of mortgage-backed security. As one collapse fell after the other, people quickly pulled out their shares from dying companies, further sickening the state of the economy as the flow of money thinned. Presidents world over called on, hoarse, for bank regulations and the world gaped astounded at the high pay checks gleaned by CEO’s while the common man struggled to hold on to his job. Austerity drives went in full swing for ministers back home. Enthusiasm of common man started dying out in sheer desolation. The dream was over.

As we stare at the painting gone awry, we know that putting a finger on the culprit is near impossible. The task on hand is to dilute the deep smudges left by the paint. One year on, there seems to be a flood of answers but probably the right one eludes us. This mess had been brought on us when we traded common sense for luxury on borrowed money, falling to the whims and promises offered by easy availability of and low interest rates on money. Economic and financial forecasting is more like astrology than mathematics. This pretty much sums up the western world’s lessons. States whose economies relied on export learnt that leaning too much on that could result in gluts in times of recession. Creating employment opportunities in one’s own land is perhaps the only sustainable method of eliminating unemployment. Exporting services and labour exposes the workforce to the risk of unsecured jobs, the sudden loss of which results in bigger problems than that already at hand.

The health of the global economy had started deteriorating even at the beginning of the century without anybody noticing it. Or was it ignored deliberately? Some may call it deliberate. While stepping into the new century, expectations were peaking. Multi National Companies were busy creating new business opportunities. Unrealistic pay packets were created and offered to even neophytes to generate competition among these companies. Freshers used these opportunities like spring boards to take longer leaps keeping in mind only the weight of the pay packets. Millions hankered after these pseudo creations and pocketed hefty pay packets for quite some time unaware of the reality. The mall culture brought expensive trivial items and luxury junks to house holds ousting the indigenous counterparts. Hollow novelty replaced utility. As people dug deeper into their pockets unabashed the economy rose higher into the skies. Or so they thought. At that time it was absurd to assume that millions of people world over would pay for it some time later. Organizing one’s lifestyle according to one’s preferences is not always worthwhile.

And there started a downward spiral which brought down with it not only the health of the companies but also the millions of dreams that had skimmed along the fringes of the former. It was a staggering U-turn as the losses made so far were irrecoverable. The total impact was unfathomable. Any exercise for fathoming the complete impact will be a wasteful exercise at this stage since it had made damage to that extent world over which had a cascading effect on almost everything. In a chain reaction manner it affected each and every walk of life and the so perceived booming strongholds of economy came down like a pack of cards.

During the last few decades of economic reforms, poverty has come down definitely, but too slowly which has raised serious doubts about whether market reforms by globalization alone could eliminate poverty and unemployment. A well-established company under strong governance for instance, the emblem of the new technological age of information technology had contributed a great extent to generate jobs for the top three percent or so graduates. But what it did for the larger masses? The making and implementation of a strong economic policy is not child’s play. Increasing economic growth in larger terms should not be the sole objective of the society. In the face of the competition from foreign markets, domestic markets should not be left to frail away. Lest the result will be catastrophic to the tune of the disaster we are reeling under today. It was a lesson learnt the hard way.

We should concentrate and analyze the failure of economic reforms globally to be able to put a finger on the exact causes leading up the recession. That painting was never meant to be. The botched up job has already added permanent morbid shades in varying depths to the canvas. There is no magic sponge to clean in every blot of the culprit paint. But certainly a thinner can be applied to lessen further damage and brighten further vistas. New prospects can be sown into the recovering panorama. Let’s hope for their blossoming into fruit bearing healthy economy in the near future. World over!

Shruthi Venukumar

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